NATIONAL INSURANCE CO. LTD. & ORS. vs M/S. ESHA POLYMERS PACKAGING THROUGH PROPRIETOR, MR. EAJAZ AHMAD, S/O. MD. QAMRUZAMA, & ANR.

This first appeal has been filed under section 19 read with section 21(a)(ii) of the Consumer Protection Act, 1986, challenging the impugned order dated 26.02.2010, passed by the Delhi State Consumer Disputes Redressal Commission, (hereinafter referred to as "the State Commission") in Consumer Complaint No. 117/2006, filed by the respondent/complainant, Esha Polymers Packaging, vide which, the appellant/opposite party (OP) Insurance Company was directed to make payment of a sum of Rs. 25 lakhs to the complainant alongwith interest @ 6% per annum for the loss suffered by them due to fire, in terms of the Standard Fire and Special Perils Policy, taken by the complainant from the appellant Insurance Company.

The facts of the case are that the complainant Esha Polymers Packaging, a proprietorship firm, obtained a Standard Fire and Special Perils policy from the appellant National Insurance Company for a sum of Rs. 35 lakhs. The said policy covered the plant and machinery including tools, stocks and raw materials, finished, semi-finished items, furniture, fixtures and fittings used for manufacturing crockery items. On 04.04.2003, a fire broke out at the factory premises, leading to damage to machinery, stocks etc. An intimation about the incident of fire was given to the OP Insurance Company, which appointed a surveyor, M/s Mehta & Padamsey Surveyors Pvt. Ltd. for the assessment of the loss. The surveyor visited the fire-affected premises on 09.04.2003 and vide his preliminary report dated 10.04.2003, estimated a loss of Rs. 25 lakhs to the complainant. However, the surveyor asked the complainant to submit various documents and relevant information. There was lot of correspondence between the surveyor and the insured regarding the documents to be submitted by the insured. The surveyor finally gave his final survey report on 07.04.2004, saying that the insured had failed to furnish the relevant documents in spite of repeated requests made by them and hence, they had closed the file as ''no claim''. Accordingly, the appellant Insurance Company repudiated the claim of the complainant vide their letter dated 21.07.2004. Aggrieved by the letter of repudiation, the Insurance Company filed the consumer complaint no. 117/2006, saying that the OP should be directed to pay a sum of Rs. 35 lakhs as compensation for the loss in terms of the policy and also to pay interest @ 16% on the said amount from the date of the incident of fire till realisation. A direction was also sought for further compensation of Rs. 2 lakhs on account of damages and Rs. 25,000/- towards mental and physical suffering.

The complaint was resisted by the OP National Insurance Company by filing a reply before the State Commission, in which they stated that disputed questions of facts were involved in the matter, an adjudication of which called for detailed and documentary evidence. The matter should, therefore, have been handled by a Civil Court and consumer fora had no jurisdiction to entertain such complaints. Moreover, since the claim was repudiated vide letter dated 21.07.2004, the complaint was barred by limitation in terms of Section 24A of the Act. It was further stated that in the event of loss due to insured perils, the insurer was required to submit all necessary documents to the surveyor, but it was not done in the present case. The complainant was asked to submit a number of documents like the audited account sheet for the year 2002-2003, item-wise statement giving the total quantity and value of stocks, item-wise statement of loss, property etc., but the desired information was not submitted by the insured to the surveyor. The consumer complaint, therefore, deserved to be dismissed.

The State Commission, after considering the averments made by the parties, stated that there was justification on the part of the complainant, for not providing various documents demanded by the Insurance Company, because they had been lost in the fire. Since the surveyor in his preliminary report had assessed the loss as Rs. 25 lakhs, the Insurance Company was liable to pay the said amount to the insured. The State Commission ordered that a sum of Rs. 25 lakhs alongwith interest @ 6% per annum from the date of the incident till realisation should be paid to the insured. Being aggrieved against the said order of the State Commission, the Insurance Company is before this Commission by way of the present first appeal.

During arguments, the learned counsel for the appellant Insurance Company stated that the surveyor appointed by them had sent several letters to the respondent/complainant, asking them to submit documents to substantiate their claim for loss to the property, machinery and stocks etc. during the fire incident, but the insured had failed to submit such documents. In the absence of these documents, it was not possible for the Insurance Company to arrive at a specific amount, which could be paid to the complainant. The direction given by the State Commission for payment of Rs. 25 lakhs to the insured, based on the preliminary report of the surveyor was not in accordance with law, because there was no basis at all for arriving at the figure of Rs. 25 lakhs. The documents were also required to find out whether there was any under insurance on the part of the Insurance Company and whether the purchases etc. made by them were in order. The insured could have made an attempt to procure duplicate copies from the supplier of the machinery/materials. The learned counsel has drawn attention to copies of a number of letters written by the surveyors M/s Mehta & Padamsey Surveyors Pvt. Ltd. addressed to the insured, asking them to send the said documents. The surveyors were left with no alternative but to state in the survey report that they were closing the file as ''no claim'' and they advised the Insurance Company also to do likewise. The insured could not provide even the audited balance sheet for the previous years. The learned counsel argued that the Insurance Company was not in a position to provide any part of the claim, considering the fact that the same could not be substantiated from the record. The learned counsel for the respondent, however, stated that the order passed by the State Commission was in accordance with law, because the said Commission had allowed the complaint, based on the preliminary report of the surveyor. When asked if the respondent was now in a position to file any such documents, the learned counsel stated that whatever information they could provide to the surveyor, had already been done.

I have examined the entire material on record and given a thoughtful consideration to the arguments advanced before me.

The main point for consideration in the matter is whether adequate material/information/documents were made available to the surveyor or the Insurance Company from which an estimate of loss during the fire incident could be made. A perusal of the preliminary loss report dated 10.04.2003 submitted by the surveyors indicates that under the heading ''estimated loss'', the surveyor mentions as follows:-

XIV.ESTIMATED LOSS

The insured have at present, orally estimated their loss at about Rs. 35 lacs. Based on the verification that could be carried out so far; we envisage that the ultimate net adjusted loss would be about Rs. 25 lacs.

We suggest the Insurers may provide a loss reserve of Rs. 25 lacs at present, subject to any variation after receiving the full details about the loss from the Insured, and the verification thereof is completed.

The surveyor also mentioned that they had sent a detailed letter dated 09.04.2003 to the insured, asking for detailed information/documents to enable them to proceed further in the matter. The copies of various other letters sent by the surveyors to the insured are also on record. The surveyors acknowledged that they received a part of the information/document vide letter dated 14.06.2003 from the insured. In their final survey report, the surveyor stated as follows:-

"E) on 16.06.2003, we received a letter no. 02/2003-2004 dated 14.06.2003, together with a part of the information/documents sought by us; claiming an amount aggregating to Rs. 27,89,863/- towards damage caused by fire to the property, the brief details of which are as under:-

ITEM OF PROPERTY DAMAGEDAMOUNT CLAIMED

On Plant & Machinery Rs. 17,98,743

Furniture, Fixtures and Fittings Rs. 25,000

Stocks Rs. 9,66,120

TOTALRs. 27,89,863

The above claim of Rs. 27,89,863/- was not supported by the relevant documents pertaining to their purchases, financial statement of accounts, books of account etc., to establish the Insurable Interest, original condition &/or status of the property damaged, and quantum of loss etc."

During hearing before me, the learned counsel for both the parties were asked whether they could provide the details of the amount of Rs. 27,89,863/- as claimed by the insured on different items. The learned counsel for the insured was asked to provide the details of items and the calculations made, according to which the said amount had been quoted in their claim letter. However, the learned counsel stated that they had no further information on the issue.

On the other hand, the order passed by the State Commission says that a sum of Rs. 25 lakhs was being allowed to the complainant alongwith interest @ 6% on the preliminary survey report of the surveyor. A perusal of the said report indicates that there is no basis given for arriving at the said figure of Rs. 25 lakhs. In the light of these facts, it is absolutely necessary to determine whether there is any reasonable basis for arriving at any figure of loss, based on which compensation could be allowed to the complainants.

In the light of the facts stated above, it is felt necessary that the matter should be re-examined after giving opportunity to the complainant to lead evidence and produce material on the basis of which, they had sent their letter dated 14.06.2003, demanding a sum of Rs. 27,89,863/-. The State Commission, should then minutely examine the basis for claiming the said amount from the OP and then gave a clear-cut finding, based on direct and circumstantial evidence produced by the parties as to how much amount was liable to be paid by the Insurance Company to the complainant. This appeal is, therefore, allowed, the order passed by the State Commission is set aside and the matter is remitted back to the State Commission with the directions that they should call the parties again, ask them to file their evidence and then take decision about the payment of claim, after considering the facts and circumstances of the case afresh. There shall be no order as to costs.